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That's an early April Fool's Day joke.
Big drugmaker Mylan apparently won't be paying higher rebates to Medicaid for its life-saving EpiPen devices until April 1. That's despite having agreed Friday to a whopping $465 million settlement over claims the company had been knowingly shortchanging the government program on such rebates, a regulatory filing suggests.
Mylan, until next April, will be paying Medicaid a rebate rate of just 13 percent on EpiPens — instead of a rate of at least 23.1 percent, and possibly a rate that some analysts have suggested could approach nearly 100 percent of sales, the filing by Mylan suggests.
When asked if in fact the company would be paying the lower 13 percent rate until then, a Mylan spokesman declined to comment. A spokesman for the federal Centers for Medicare & Medicaid Services also declined to comment.
The 8-K filing with the Securities and Exchange Commission does not say why federal officials gave Mylan such a grace period.
The same filing reveals that Mylan is under investigation by the SEC in connection with rebates Mylan pays to Medicaid for EpiPen and other products.
Mylan's filing also said it is cooperating with that investigation by the SEC, which has asked for documents about communications the company had with CMS related to the Medicaid Drug Rebate Program.
Neither Mylan's grace period for paying higher rebates on EpiPen, nor the SEC probe, were disclosed in a press release the company issued Friday announcing the settlement with the Justice Department and federal health regulators. Instead, they were mentioned that day in the 8-K filing.
Before Friday, Mylan had faced increasing scrutiny by Congress and others surrounding outrage over the company having raised the price of EpiPen more than 500 percent in recent years. A two-pack of EpiPens now sells for more than $600.
Families have complained that the cost of the device is straining their household budgets because they often buy multiple packs of EpiPens to have at home, school, work and their car in the event of an a potentially fatal allergic reaction known as anaphylaxis.
Among the questions raised by the controversy was whether Mylan was paying enough in rebates to Medicaid, the system that provides health coverage to primarily poor people.
Under its drug rebate program, Medicaid requires pharmaceutical companies that want to have their medications covered to agree to pay rebates to Medicaid, with the money being split by the federal and state governments that jointly run the system.
Sellers of generic drugs pay a rate of 13 percent. Sellers of brand-name drugs pay a rate of at least 23.1 percent.
But sellers of brand name drugs can pay more — a lot more — if they raise the price of their medications beyond the rate of inflation, as a result of adjustments in the rebate program. EpiPen would be subject to such an enhanced rebate rate.
CMS told CNBC almost two weeks ago that the agency had repeatedly informed Mylan that the company had misclassified EpiPen as a generic, and as a result was shortchanging Medicaid by paying the lower rebate rate.
The head of CMS, Andy Slavitt, days later told Congress the same thing when he revealed that Medicaid had paid more than $700 million for EpiPens after rebates were factored in from 2011 to 2015.
But Slavitt added that the agency could not say how much Mylan had underpaid Medicaid during that time in CMS' opinion. And CMS has refused to say when it first notified Mylan of the misclassification by the company.
Despite CMS' claims of misclassification, Mylan has repeatedly said that in classifying EpiPen as a non-innovator, or generic, drug for rebate purposes, the company was relying on longstanding written guidance from the government, dating back two decades.
On Friday, CNBC reported an analysis by Evercore ISI had found that if Mylan had knowingly underpaid Medicaid from 2011 on, it could be forced to pay more than $700 million in rebates, in addition to potential penalties under the False Claims Act. That huge dollar amount reflects the effect of the inflation adjustment by the rebate program.
Hours later Mylan, without admitting any wrongdoing, surprised many by announcing its $465 million settlement with the Justice Department.
Mylan's stock has soared on the heels of that deal. Shares were up more than 8 percent in mid-day trading Monday, as Raymond James issued a "strong buy" upgrade on the stock, with a target of $57 per share. The firm called the penalty "costly" but "diminutive relative to the company's financial wherewithal."
Mylan's 8-K filing noted that the settlement terms resolve "all potential liability claims by federal and state governments as to whether the product should have been classified as an innovator drug for CMS purposes, and subject to the higher rebate formula."
But it also said that "consistent with the recent CMS rule regarding the classification of drugs for rebate purposes," EpiPen "will begin being classified as an innovator drug on April 1, 2017."
That same filing discloses the SEC's new probe of Mylan.
"Also, on October 7, 2016, Mylan received a document request from the Division of Enforcement at the Securities and Exchange Commission ... seeking communications with the CMS [federal Centers for Medicare and Medicaid Services] and documents concerning Mylan products sold and related to the Medicaid Drug Rebate Program, and any related complaints."
"Mylan intends to fully cooperate with the SEC's investigation."
The 8-K also notes that Mylan expects to enter into a corporate integrity agreement with the Office of Inspector General's Department of Health & Human Services.
In a research note Monday, Wells Fargo senior analyst David Maris questioned why Mylan chose "not to disclose the investigation in its press release but did mention it in the 8-K," calling that decision "surprising."
"We think investors will like the settlement as many will think this puts the issue largely behind the company — we disagree as this only addresses the CMS portion of this — it does nothing to answer the original issue — EpiPen pricing and customers," Maris wrote.
"While some legislators may at first blush exclaim that the government has done its job in extracting some financial arrangement, we do not believe that this will be the end of the debate, as consumers will not see any of the money coming from the CMS/DOJ resolution," Maris wrote. "We believe the issues of antitrust and potential SEC issues may linger."